The share of ADRs and GDRs in the total foreign direct investment inflow into the country has slumped to insignificance during 2002.
As against a contribution of 35-40 per cent of the total FDI till a couple of years back, ADRs/GDRs will constitute as low as 2-3 per cent this year.
Total inflows on account of ADR/GDR issues by Indian companies may still be higher than last year, but marginally. "It could be much higher if Indian companies tapped global markets," said a government official.
Between January and August this year, total FDI inflow was around Rs 14,434.6 crore (Rs 144.346 billion), of which GDRs/ADRs and foreign currency convertible bonds contributed only Rs 762.8 crore (Rs 7.628 billion), or 5.3 per cent.
Government officials said FDI inflows till December 2002 would be higher by another around Rs 6,000-8,000 crore (Rs 60-80 billion).
But the contribution of GDRs/ADRs will remain the same, which means that the percentage of depository receipts will be as low as 2-3 per cent.
Compare this to ADR/GDR proceeds of Rs 6,701.1 crore (Rs 67.011 billion), or 40 per cent, of the total Rs 16,867.8 crore (Rs 168.678 billion) FDI in 1999 and Rs 6,987.9 crore (Rs 69.879 billion), or 36 per cent of the Rs 19,341.7 crore (Rs 193.417 billion) in 2000.
Government officials point out that the contribution of ADRs and GDRs has been declining for two years now. In 2001, for instance, it declined to Rs 2,487.5 crore (Rs 24.875 billion), 13 per cent of the total inflow of Rs 19,265.1 crore (Rs 192.651 billion).
"Although we will always like Indian companies to tap global stock markets since, in the end, India's FDI inflow will increase, in hindsight it is encouraging to note that despite the fall in GDR/ADR issues in the past couple of years, the inflow has gone up. Even this calendar year, we are expecting a marginal improvement in the inflow figure," the official said.
The government is hoping that a turnaround in the fortunes of the American and other global stock markets in 2003, and the improved business sentiment across the globe will result in a higher FDI realisation in 2003.
"For instance, new sectors which we have opened up or are intending to liberalise further have not attracted high FDI inflow since investors were not bullish this year. But this sentiment cannot continue for a long time," the official said.
India also switches to a new accounting system in January 2003 for FDI based on the IMF formula for calculating foreign investments.
The switch is expected to take up India's inflows close to $10 billion a year as compared to $4 billion a year now. The gap between China and India will also narrow considerably.
Since liberalisation began in 1991, India has received foreign investment worth Rs 22,848.1 crore (Rs 228. 481 billion) through the ADR/GDR/FCCB route.
© 2025